India is rapidly migrating to an alternative fuel environment. Yet until relatively recently, despite being a critical clean fuel, natural gas was not given its due prominence as there was a clear lack of policy initiative. Under the Modi government, the push to this fuel segment has been fast tracked as is apparent in the time-bound rollout of the 9th and 10th round of auctions. The government is looking to increase the contribution of gas in the total energy mix from 6% to 22% by 2022. This presents significant visibility to the CGD growth story.

At the CMP of Rs.64, JSL is trading at an EV/EBITDA of 5.2 x FY19E. We initiate with a BUY on JSL with a target price of Rs.127 (FY21 EV/EBITDA of 5x), which represents an upside of 98.4% over 18 months.